Displaying items by tag: Uzbekistan
Chinese producers and plant builders have arrived
30 September 2015The past few weeks have been notable for the high number of cement plant projects announced. Aside from further Dangote developments in Africa, (which doesn't seem to be able to go a week without announcing some 'milestone' or another,) a growing number have been in 'new' markets, especially in Central Asia.
The list from the past month or so is impressive. In east Asia Myanmar's Ait Thit Man group has announced that it will double its capacity from 5000t/day to 10,000t/day. In the south, Shree Cement wants to build another new facility in India. In west Asia, Pakistan, a country that has not seen significant cement capacity investment in the past few years, will be getting a new plant in Salt Range courtesy of China's Yantai Yantai Baoqiao Jinhong.
Turkmenistan looks set to build a 1Mt/yr plant as part of a massive government industrial stimulus package. China's Jilong Group wants to build a 0.8Mt/yr plant in Issyk Kul, Krygyzstan. Another Chinese producer, Xinjiang Tianshan will be bringing a 1.2Mt/yr plant to Georgia. Even today (Wednesday 30 September 2015), we have heard that there will be further Chinese investment, this time by Shangfeng Cement. It has announced financing for two new plants: in Tajikistan and Uzbekistan. Both are set to be 1.2Mt/yr facilities.
Two trends are clear from this. 1. Land-locked Central Asian and other relatively undeveloped countries elsewhere in Asia are finally coming to the cement plant party. 2. It is the Chinese producers that have the upper hand in these markets. This is based partly on cultural, political, geographical and historic links between China and these former Soviet nations. It is partly due to the lower 'face value' cost of Chinese equipment compared to European manufacturers. (The efficiency with which the lower cost equipment is installed and its running costs remain potential pitfalls, according to the Europeans.) Finally, it has a lot to do with the collapse of domestic demand for cement plants in China itself, where the economy continues to teeter on the brink.
The steady rise of the Central Asian cement sector and the increasing international activities of Chinese cement plant manufacturers have been 'on the cards' for years. To date, they have been trends waiting to happen, but 2015 looks to be the year that these factors finally combined and translated into large numbers of projects.
For Central Asian countries the prospects that come with a larger and more dynamic cement industry should enable greater independence, accelerated infrastructure development and economic growth. For the Chinese, setting up cement plants in Central Asia is a natural expansion of its multi-billion dollar activities in the African cement sector, where Sinoma recently signed a massive deal with Dangote Cement. As noted previously in this column, Africa can't continue to add capacity at the current rate forever.
For European manufacturers of cement plants, the other side of this story is not as pretty. AGAB, the large plant manufacturing group of Germany's Verband Deutscher Maschinen- und Anlagenbau (VDMA), has recently released its Status Report 2014/2015, which reports on activities from 2014. AGAB members' cement plant order volume fell by an incredible 63% in 2014 to Euro198m. This is a fall from Euro529m in 2013 and six times lower than the Euro1.2bn peak of 2008. Some of this is domestically driven but the vast majority of it is export markets.
The same report also shows that, for construction of all types of large industrial plants, Chinese producers have increased their global market share from 5% in 2006 to 17% in 2014. Over the same period, Western European producers have seen their share fall from 45% to 33%, although an increase in overall project volumes mean that these producers received roughly the same value of orders in each year. US suppliers, although not a major consideration for the cement sector, saw their share of orders fall from 22% to 20%. Japan also lost a third of its stake over the same period, falling from 15% of sales in 2006 to just 10% in 2014.
While AGAB's report anticipates increased competition from Chinese producers, it is by no means all 'doom and gloom' for Europe's traditional large plant manufacturers. It highlights the fact that Russia, the largest single market for heavy plant in 2014 and a significant consumer of European-made cement equipment, has decided against Chinese equipment in some cases. It also highlighted that the weakness of the Euro helps exports from Germany and the rest of the Eurozone and suggests that the sector should look to increase its service and consultation offering in order to build on its existing reputation for high quality equipment.
Shangfeng Cement to invest in Tajikistan and Uzbekistan
30 September 2015Tajikistan/Uzbekistan: Chinese cement producer Shangfeng Cement plans to raise US$240m through a non-public share offering. It will be used to partly fund investments in Central Asia. A total of US$130m will be invested in projects in Tajikistan, US$137m will be invested in projects in Uzbekistan and US$16m will be used to replenish working capital.
The first phase of the Tajik project, with a construction period of 18 months, will be capable of producing 0.96Mt/yr of clinker and 1.2Mt/yr of cement. Its products will be sold in southern and central Tajikistan, Uzbekistan and northern cities in Afganistan.
The Uzbek project will be the same size, with its products sold to eastern Uzbekistan, southern Kyrgyzstan and northern Tajikistan.
Uzbekistan: The State Statistics Committee of the Republic of Uzbekistan said that in January – June 2015 the construction materials industry produced 2.11Mt of goods, 11.3% more than in the same period of 2014. The share of industry in total industrial production was 5.2%, according to UzReport. Compared with the first half of 2014, large enterprises in Uzbekistan have increased their production of Portland cement by 113%, gypsum by 108%, lime by 135%, non-refractory ceramic building bricks by 116% and fibre cement by 118%.
Uzbekistan to launch two new cement plants in 2016
25 February 2015Uzbekistan: Uzbekistan is planning to commission two new cement plants in 2016, according to Islom Arslonov, department head at Uzstroymateriali (Uzbek Construction Materials). A 0.4Mt/yr plant is being built by Karakalpak Cement in Karakalpakstan for launch in 2016. A 2.2Mt/yr plant being built by Surkhoncementinvest in Jarkurgan district of Surkhandarya.
Arslonov noted other cement projects that have been built in Uzbekistan recently including a 0.75Mt/yr plant commissioned in Jizzakh in 2014, the Ferghana Cement 0.15Mt/yr plant in Ferghana, the SingLida 0.12Mt/yr plant in Andijan and the Keer 20,000t/yr plants also in Andijan.
Accoridng to Arslonov, eight cement plants are operating in Uzbekistan with a total production capacity of 8.8Mt/yr.
Court postpones consideration of appeal of Eurocement Group
11 September 2014Uzbekistan: The board of appeals of Tashkent regional economic court has postponed the consideration of the case regarding the privatisation of Eurocement's Ahangarancement plant.
Eurocement officials requested additional time to sign a settlement agreement with defendant, the State Committee of Uzbekistan, for the privatisation, demonopolisation and development of competition, according to local media. The next session of the appeal board of Tashkent regional economic court will be held on 25 September 2014.
Eurocement appeals Uzbek subsidiary privatisation
03 September 2014Uzbekistan: The Supreme Economic Court of Uzbekistan has received an appeal from the Russian company Eurocement Group asking the court to not annul the privatization of Ahangarancement. The appeal will be considered in the middle of September 2014.
On 21 July 2014, the Uzbek court declared the 2006 privatization of the cement plant invalid. Eurocement, the largest shareholder of the cement plant, dismisses the claims of the Uzbek committee. If the company loses the case, its assets will be nationalised.
Uzbekistan seizes Akhangarancement assets
30 July 2014Uzbekistan: The Tashkent Regional Economic Court in Uzbekistan has seized the assets and bank accounts of JSC Akhangarancement, a subsidiary of Russia's Eurocement Group, according to an Akhangarancement statement. The move follows the granting of a suit brought by the Uzbekistani State Competition Committee on 21 July 2014 regarding the privatisation of the cement producer in 1994, which it is investigating.
Money in bank accounts equivalent to US$177.8m and fixed assets amounting to US$19.1m were seized. An Akhangarancement source said that, despite the seizure of the accounts, the plant continues to work as usual and produce cement.
Eurocement Group claims that the State Competition Committee's claims are contrived and it plans to appeal the decision of the regional court at a higher court. Eurocement has 30 days to file an appeal. If the court upholds the first ruling, this will essentially mean the nationalisation of the asset.
Eurocement became a shareholder in Akhangarancement eight years after it was privatised, buying 75.5% of its shares on the secondary market in August 2006. Currently, Eurocement Group's stake in the enterprise is 83.9186% or 4,136,269 shares, of which Switzerland's Eurocement Holding AG is the direct owner. The rest of the shareholders are private individuals.
Uzbekistan: Eurocement has become the third Russian company to risk losing assets in Uzbekistan after Wimm-Bill-Dann Foods (WDB) and MTS. The president of Eurocement, Mikhail Skorokhod, said that the Tashkent Region's Economic Court has granted a suit brought by Uzbekistan's State Competition Committee to invalidate the privatisation of JSC Akhangarancement, which was based on a decree that was signed in the mid-1990s. Eurocement became a shareholder in Akhangarancement eight years after it was privatised, buying 75% of its shares on the secondary market in 2006.
"We bought Akhangarancement in 2006," said Skorokhod. "We met all of the local legislative requirements, paid taxes and contributed to the solution of social and environmental problems. The enterprise was inspected from time to time, but no serious complaints were made. A few months ago a spot check involving nearly 20 organisations began. Despite the unprecedented scale of the inspection, nothing was found that violated the law. We found out on 16 July 2014 about the State Competition Committee's lawsuit to overturn the decree of 30 August 1994 on the privatisation of Akhangarancement. The Tashkent region's Economic Court accepted the suit on 17 July 2014 and the ruling was made on 21 July 2014 morning, in literally a few hours."
According to Skorokhod, the lawsuit cites items that were not taken into account in the privatisation, but none of them are capital assets (such as seedlings, furniture, enclosures, printers and trailers). Uzstroymaterialy, the state company that oversees the industry and Uzbekistan's Justice Ministry have deemed the lawsuit unfounded, but the court did not take its position into account.
Eurocement has 30 days to file an appeal. If the court upholds the first ruling, this will essentially mean the nationalisation of the asset. The plant is continuing to produce cement as usual. "If we don't get a positive court ruling in Uzbekistan, we will file a lawsuit in the International Centre for Settlement of Investment Disputes (ICSID) at the World Bank in Washington," said Skorokhod.
The attempted nationalisation is particularly troubling to Eurocement in light of the expansion plan it has for the plant. Eurocement has signed a contract with China CAMC Engineering Co Ltd for the provision of equipment, designs, installation supervision and employee training worth Euro95.0m for the construction of a new dry-process cement plant as part of the Akhangarancement plant. The new plant's capacity will be 2.4Mt/yr of cement. The launch is expected in 2016.
The contract includes the provision of the full range of equipment required for cement production, including mechanical equipment, furnaces, cyclone pre-heaters, grinders, mills, electrical and automatic equipment and monitoring and measuring devices.
Central Asia cement roundup
02 July 2014A group of news stories from Central Asia and Azerbaijan this week present a good opportunity to look at the cement industry in this part of the world.
Uzbekistan
Eurocement has announced that it plans to build a 2.4Mt/yr cement plant near to Tashkent. Chinese contractors have been signed for the work in line with the Russia-based cement producer's other plant builds in 2014. Eurocement also operate a subsidiary in the country, the 1.6Mt/yr Akhangarancement cement plant, that reported a criminal investigation and financial audit following various misdemeanours in April 2014.
Also in April 2014 the Almalyk Mining-Metallurgical Combine (AMMC) proposed building a 1.5Mt/yr cement plant in the south of the country and then commissioning of a white cement plant in the central Jizzakh Province. Both the Eurocement and AMMC projects show that organisations are investing in the local market of the region's most populous country at around 30m.
Turkmenistan
In neighbouring Turkmenistan the TurkmenCement Production Association has issued a tender this week for the construction of a 1Mt/yr clinker plant in the central-south of the country in the Baharly District of the Akhal Region. If realised, the new plant will raise Turkemistan's cement production capacity to 4Mt/yr. Currently the country has three state-operated plants. The most recent, the 1.4Mt/yr Garlyk plant, was commissioned in February 2013.
Kazakhstan
An investor has stepped forward to finance the completion of the delayed Khantau cement plant in Zhambyl region in southern Kazakhstan. The 0.5Mt/yr plant was originally started in 2007 before being mothballed part-way through construction.
The reignition of this project follows a couple of stories from Kazakhstan including a report on testing at the HeidelbergCement Caspi cement plant in Mangistau region and the start of operation on Line 5 of Steppe Cement's Karaganda Cement. Kazakhstan has more western international cement producers, unlike the generally state-run companies in Uzbekistan and Turkmenistan. HeidelbergCement will join plants run by Italcementi and Vicat.
Azerbaijan
Finally, on the other side of the Caspian Sea, Azerbaijani local media has reported that cement production for the first half of 2014 has risen by 40% year-on-year to 1.1Mt. Following the opening of the Gazakh cement plant in mid-2013 the country has three cement plants with a combined cement production capacity of nearly 5Mt/yr.
Uzbekistan: Eurocement plans to build a new 2.4Mt/yr cement plant in Uzbekistan worth US$128m. Commissioning is expected in 2016. The company has signed a contract with China CAMC Engineering Co Ltd for the supply of equipment, design, installation supervision and training for construction of the cement plant in the Tashkent Region.